Tuesday, October 31, 2006

Patent Enforcement May Irk Competitors, But It Can Also Anger Potential Customers As Well

Since Blackboard sued online learning company Desire2Learn over US Patent 6,988,138 ("Internet Based Education Support System and Methods"), there was a great outcry from companies that perceived themselves as being similarly situated as Desire2Learn. Since many of Blackboard's competitors are developing companies, they understandably feel threatened over potential patent litigation that can easily swamp their businesses with expensive legal fees.

Accordingly, many in the online learning community banded together to start a PR campaign against BlackBoard and the '138 patent, publishing numerous articles disparaging the patent and BlackBoard's decision to enforce it. One site, called "BlackBoard is Suing Me" has been created to track BlackBoard's enforcement effort, and a wiki has been set up to collect potentially invalidating prior art. Efforts are also being coordinated with the EFF to raise "awareness" over education-related patents. In the meantime, BlackBoard has been defending its patent, and even set up a FAQ site that explains their patented technology.

Recently, leaders of higher education’s main technology association Educause have injected themselves into the controversy by writing a strongly-worded letter urging Blackboard to relinquish the '138 patent and drop its patent infringement lawsuit against Desire2Learn. In their letter, which was claimed to be written on behalf of the entire “higher education IT community,” Educause used unusually dramatic language to describe how college technology officials view Blackboard’s patent and its lawsuit against Desire2Learn:

One of our concerns is that you may not fully appreciate the depth of the consternation this action has caused for key members of our community . . . We have seen this intensity of anger only a few times before. In those cases, the corporations involved were unaware of what was happening outside their official channels. Please do not underestimate this consternation which we believe will impact Blackboard in both the short- and the long-term.
Read the letter here (bottom of the page). Also read Educause's letter to members regarding future efforts at patent reform in light of BlackBoard's patent.

Also, Fannie Mae, who is the largest purchaser of real estate mortgages in the United States, has gotten into a bit of hot water over the issuance of U.S. Patent 7,089,503 ("Mortgage loan customization system and process"). While Fannie Mae has not sued anyone on this patent, Bank Industry Groups are taking no chances and similarly requested that Fannie Mae "renounce any rights to enforce the Patent and place it into the public domain." The request was endorsed by seven industry groups including the American Bankers Association, the Consumer Mortgage Coalition, and the Mortgage Bankers Association.

The interesting thing is that Fannie Mae cannot originate loans, but can only buy them on the secondary mortgage market. Trade groups are concerned that Fannie Mae's patent will prevent other companies from developing similar technology and block innovation in the housing finance market.

Also, since Fannie Mae is a government sponsored enterprise, three trade groups decided to voice their concerns about the patent to the Office of Federal Housing Enterprise Oversight and the U.S. Department of Housing and Urban Development, who are the top regulators of Fannie Mae and rival Freddie Mac. While details of the meeting are not readily accessible, it can be presumed that the government was solicited to help in the effort to quash the '503 patent.

This raises a potentially interesting issue for patentees and their perceived image within an industry or consumer group. If patent portfolios are developed to cover actual products, does the risk of potentially alienating peers or consumers in the market outweigh the risk of losing potential licensing revenue covered by issued patents? And if industry groups "shame" companies to the point where they lose market share of active products, will this tactic force patent holders to become even more aggressive in their enforcement of patents to make up for lost revenue?

Monday, October 30, 2006

Failure to Recite Specific Length Results in Best Mode Violation

Go Medical Industries v. Inmed Corp. (05-1241) October 27, 2006

During litigation regarding catheter technology, defendant Inmed challenged the validity of Go Medical's U.S. Patent 4,652,259, claiming it was anticipated by a prior art publication. Go Medical countered that the prior art was not applicable since the '259 patent was a CIP having priority to a 1979 application that predated the publication.

The claims of the '259 patent require the catheter sheath to be inserted "about 1.5 cm" or up to (but not beyond) a "known position of maximum pressure." The specification of the 1979 application discloses that "the stop means can be set [at] a predetermined distance along the sheath depending on the usual extent of bacteria within the passage."

In order to get priority, Go Medical had to show that the 1.5 cm feature was sufficiently disclosed in the 1979 application to satisfy 35 U.S.C. 112. To meet the best mode requirement of section 112, a determination was made whether Go Medical's inventor, Dr. O'Neil, considered a particular mode of practicing the invention to be superior to all other embodiments at the time the 1979 application was filed. If so, then a determination is made whether sufficient disclosure was provided to allow others to practice that best mode.

The Federal Circuit found from Dr. O'Neil's deposition testimony that a best mode was contemplated - and that Dr. O'Neil failed to disclose this mode in the 1979 application:

As to the first prong of this test, Dr. O'Neil admitted during his deposition that at the time he filed his patent application in 1979, he had already made sample catheters where the distance from the stop member to the distal end of the sheath was 1.5 cm. He further characterized it as "the preferred embodiment at that stage" . . . The '259 patent, at col.2, ll.65-69, describes this distance as "crucial" to preventing bacteria from being pushed into the bladder by the catheter or by the sheath itself.

We also agree with the district court that the 1979 application lacked sufficient disclosure to allow others to practice the best mode . . .There is no dispute that the preferred length of 1.5 cm was not expressly disclosed. Dr. O'Neil even testified at his deposition that when drafting the 1979 application, he purposely "avoid[ed] any comment with relation to length" because he "was aware that numbers would become limiting themselves."

[M]oreover, Dr. O'Neil also testified that "[i]t took [him] a few weeks of experiments to define the distance" and others would "have to do a small amount of experimental work" to reach the same conclusion . . . In other words, one of ordinary skill would not know from reading the 1979 application that the preferred length between the stop member and the distal end of the sheath was 1.5 cm.

Since the best mode was violated, Go Medical could not rely on the 1979 application for priority against the prior art. Accordingly, the patent was anticipated by the publication.

Read the opinion here.

Friday, October 27, 2006

"Top Ten" MEMS Patents To Watch

Microelectromechanical Systems (MEMS) are the larger cousin of Nanoelectromechanical Systems (NEMS) and cover devices that generally range in size from a micrometer (a millionth of a meter) to a millimeter (thousandth of a meter). Currently, MEMS are used in applications relating to inkjet printers, accelerometers, MEMS gyroscopes, pressure sensors, optical switching and displays (the DMD chip in a projector based on DLP technology has several hundred thousand micromirrors on the surface).

Blaise Mouttet, who is a Patent Analyst, a former examiner, and author of TinyTechIP Blog, conducted a review of 2,642 patents related to MEMS and organized the patents based on breadth. After analyzing the patent claims, Blaise compiled the following list, titled "Top Ten Broadest US Patents for Microelectromechanical Systems (MEMS)":

1. US Patent 6,481,570 - "Packaging atmosphere and method of packaging a MEMS device," priority Sept. 29, 2000

Claim 1 - "A packaging atmosphere packaging a MEMS device, the packaging atmosphere selected to have a thermal conductivity exceeding the thermal conductivity of air."

2. US Patent 6,441,405 - "Micro-mechanical elements," priority June 4, 1998

Claim 1 - "A micro-mechanical element comprising: a discrete switching element; and a switching means for applying force to the switching element to move the switching element between two stable positions. "
3. US Patent 6,904,191 - "MXN cantilever beam optical waveguide switch," priority March 19, 2003
Claim 1 - "A micro-electro-mechanical system optical switch, comprising: a cantilever beam optical switch associated with a plurality of optical waveguides formed on a flexible cantilever beam for switching optical states. "
4. US Patent 6,004,912 - "Vapor phase low molecular weight lubricants," priority June 5, 1998
Claim 1 - "A method of lubricating a micro machine comprising the step of applying a lubricant to the micro machine wherein the lubricant is a compound having a permanent electric dipole moment."

5. US Patent 6,433,411 - "Packaging micromechanical devices," priority May 22, 2000
Claim 1 - "A micro-electronic machined mechanical (MEMS) assembly comprising a silicon chamber having a silicon base and silicon sidewalls, and a MEMS device mounted on the silicon base within the silicon chamber."
6. US Patent 6,707,351 - "Tunable MEMS resonator and method for tuning," priority March 27, 2002
Claim 1 - "A microelectromechanical resonator comprising: a microelectromechanical resonant structure characterized by a mass and one or more selectively doped regions; a vaporizable material for altering the mass of the resonant structure."
7. US Patent 7,019,955 - "MEMS digital-to-acoustic transducer with error cancellation ," priority Sept. 13, 1999
Claim 1 - "An acoustic transducer, comprising: a substrate; a micromachined mesh fabricated on said substrate; a layer of material sealing said mesh to form a flexible diaphragm; and electronics connected to said diaphragm."

8. US Patent 7,053,736 - "Microelectromechanical device having an active opening switch," priority Sept. 30, 2002

Claim 1 - "A microelectromechanical device, comprising a beam configured to apply an opening force on a closed switch, wherein the opening force is substantially independent of a force stored in the closed switch."
9. US Patent 6,445,006 - "Microelectronic and microelectromechanical devices comprising carbon nanotube components, and methods of making same ," priority July 27, 1999

Claim 1 - " A microelectronic or microelectromechanical device, comprising: a substrate, wherein the substrate includes an oxide layer and an etch stop layer for the oxide layer; and a fiber formed of a carbon-containing material."
10. US Patent 7,114,397 - "Microelectromechanical system pressure sensor and method for making and using", priority March 12, 2004

Claim 1 - "An apparatus, comprising: a substrate defining a plane; a first conducting plate substantially normal to the substrate; and a second conducting plate substantially normal to the substrate and deformable in response to a pressure."

See Blaise's post here.

Tuesday, October 17, 2006

The 271 Blog is in Germany

This week I am in Münich, Germany, meeting with various clients and speaking on numerous issues regarding US patent reform, software patents, and business methods. I had hoped to get some time to post, but unfortunately my schedule has been more hectic than expected (the jet lag is always murder). I'm still hoping to get some posts out this week, but I will see how it goes.

I was also pleased to meet some readers in Münich, and had some some interesting conversations regarding EU/US approaches to patent law. If you're in the Münich area, feel free to e-mail me (contact info is on the right side of the screen) and I'd be happy to meet with you, schedule permitting. I'll also be in Düsseldorf next Monday, and Frankfurt on Tuesday.

It never ceases to amaze me how four simple words ("software should be patentable") can provoke such disparate responses from similar groups of people . . .

Friday, October 13, 2006

You've Heard of "the Iron Chef" - Now Meet "the I.P. Chef"

First it was biochemistry, then it was software and business methods, and now . . . cooking?

In the recent issue of Food & Wine Magazine, Pete Wells writes about the recent (and controversial) issue of applying principles of intellectual property to the culinary arts. The story begins at the Moto restaurant in Chicago, where avant-garde chef Homaro Cantu serves a dessert that includes pink cotton candy printed on a tiny sheet of edible paper that tastes like cotton candy as well. When you look closely at the paper, there is the following (edible) text:

Confidential Property of and © H. Cantu. Patent Pending. No further use or disclosure is permitted without prior approval of H. Cantu.
Cantu, who is considered by many as a cutting-edge chef, has decided to take the plunge into the world of I/P and has started copyrighting and patenting his cooking techniques. To date, he claims to have filed 14 patent applications (3 of them, including the edible paper, can be viewed here), and numerous copyrights on his culinary works.

Like software in the 80's, chefs have traditionally worked on an "open-source" model, where ideas were freely borrowed and expanded upon. In some cases, the ideas were stolen outright. Accordingly, influential people in the culinary world are turning to patents and are proposing changes to copyright law to allow chefs to own their recipes the same way composers own their songs. Under the proposal, anyone who wanted to borrow someone else's recipe would have to pay a licensing fee.

Cantu has even contacted the American Red Cross about using edible paper as a lightweight form of famine relief. Ultimately, the idea is to have paper that is "printed" with amino acids, complex carbohydrates, vitamins, minerals and even medicine. If the idea succeeds, relief agencies might be able to airlift a strip of paper instead of bulkier and heavier foods like MREs or bags of rice.

And Cantu is starting to get support from some very influential people. Steven Shaw, who is a cofounder of eGullet and former lawyer, has spearheaded a challenge to the traditional ban on recipe copyrights. While he was first skeptical, he eventually had a change of heart:
Then one day I was sitting there . . . and I thought, Why not? It doesn't make any sense. The assumption is that a list of ingredients is like a formula, as opposed to literature or art or craft. But I think serious recipes really are a form of literary craftsmanship. You can copyright the world's worst photograph, but you can't copyright a recipe, or its expression as food? That's absurd!
Shaw is looking to hold a summit meeting with leaders in the culinary world to establish a workable model for copyrighting food. One of the proposed changes includes modifying the copyright code to make cuisine a subdivision of the existing category for sculpture or recognizing recipes as a form of literary expression. For enforcement, Shaw wants to run the system like ASCAP, who collects composers' royalties for public performances of songs.

This idea has even sparked the interest of Nathan Myhrvold, who's an amateur chef and founder of Intellectual Ventures. Myhrvold has already begun registering new patents and buying up existing ones at an aggressive pace.

The article may be viewed here, and is great Friday read (long, but worth it).

See Ed Foster's InfoWorld Blog, which refers to culinary I.P. as "Intellectual Property Madness."

Thursday, October 12, 2006

Survey: Litigation Becoming Part of Doing Business

The law firm of Fulbright and Jaworski recently published it's third annual survey of corporate litigation trends, where 422 in-house law departments worldwide were interviewed. The survey found that U.S. companies face an average of 305 pending lawsuits internationally, and for large U.S. companies (those with $1 billion or more in annual gross revenue) the number of lawsuits climbed to 556 cases, with an average of 50 new disputes emerging each year for close to half of them.

While previous surveys found that U.S.-based litigation was more predominant, the number of international disputes has started to climb – more than one-third of companies said that up to 20 percent of their dockets originate in foreign venues. Also, the companies aren't only appearing as defendants in the lawsuits - 70% of the in-house counsel surveyed claimed that their companies initiated at least one new lawsuit in the past year as plaintiff.

One third of all companies, and nearly 40 percent of $1 billion-plus firms, project the amount of litigation to increase next year.

When asked to identify their greatest litigation concerns, despite the recent publicity generated over investigations into stock options backdating, companies say their no.1 litigation fear stems from labor and employment claims, followed by contract disputes, followed by regulatory actions, patent and other intellectual property suits, and class actions.

One surveyor commented that the study "[r]eveals how thoroughly litigation is woven into U.S. corporate culture – the sheer number of cases and huge slice of spending taken up by lawsuits make abundantly clear that litigated disputes are a fundamental part of doing business."

Story from the Insurance Journal here.

For copies of the survey, see here.

Lunching With Attorneys

Sharpen up your motions practice - it's time for lunch!

Wednesday, October 11, 2006

Why the USPTO's Interim §101 Guidelines Need to be Updated . . . Quickly

Since the release of the USPTO's Interim Guidelines for Patent Subject Matter Eligibility, §101 rejections have become almost de rigueur in the USPTO for many software and business-method applications. Instead of settling issues of patentable subject matter at the PTO, the level of uncertainty in the examining corps has gotten progressively worse. One of the perceived problems is that the Guidelines give little deference to post-Alappat cases, and only sparingly cover caselaw after State Street. Some of the quotations of caselaw in the Guidelines are taken out of context, and some citations are simply wrong. Since examiners are increasingly relying on these Guidelines, it appears that another round of sua sponte "USPTO caselaw" is being generated at the Office. Oddly enough, this was precisely the reason why Ex Parte Lundgren became such a big issue: examiners were erroneously interpreting caselaw and concluding that claims had to be within the "technological arts" in order to be patentable. The BPAI expressly ruled that this was incorrect.

The Financial Services Industry Intellectual Property Association (FSIIPA) has provided comments to the USPTO which detail many of these concerns, and provide useful examples of the errors contained in the guidelines:

For example, the Guidelines quote the core holding of State Street – that the § 101 categories are no longer central, rather § 101 focuses on "the essential characteristics of the subject matter, in particular, its practical utility" – in an off-hand way at page 15. However, the Guidelines are nearly silent on applying this holding, consigning it to an Annex at page 39. The Guidelines then depart from State Street, mentioning "categories" 150-200% as often as they mention State Street, AT&T, or "utility," and grafting a number of additional requirements onto § 101, above "practical utility."

As a second example, though Annex III of the Interim Guidelines states that the Freeman-Walter-Abele test is improper for determining eligibility under § 101, and Freeman-Walter-Abele is never mentioned by name, Freeman-Walter-Abele reasoning and case law pervades the Interim Guidelines. For example, in § IV(C)(2)(b) at page 20, the Interim Guidelines states as follows:

In determining whether the claim is for a "practical application," the focus is not on whether the steps taken to achieve a particular result are useful, tangible and concrete, but rather that the final result achieved by the claimed invention is "useful, tangible and concrete." The claim must be examined to see if it includes anything more that a § 101 judicial exception.

Though using different words, this is remarkably similar to – and somewhat narrower than – the Freeman-Walter-Abele test, in its focus on "anything more." Further, the Guidelines rely almost exclusively on Freeman-Walter-Abele era, pre-Alappat standards for an application of law to facts to determine what that "anything more" might be. Finally, the Guidelines cite no authority for the idea that "useful, tangible and concrete" steps cannot contribute patentability – and this statement is clearly wrong. If the Guidelines maintained focus where Alappat, AT&T, and State Street direct it, on "useful, concrete and tangible" and "practical utility" (as properly construed – see § II.C at page 10 of this letter) this discussion would simply never arise.

Because of this anachronism, and failure to recognize the shift in the standard for application of the law to the facts, the Interim Guidelines lead to wrong conclusions. If an examiner were to apply the Interim Guidelines to the facts of Alappat, State Street and AT&T, the examiner would very likely find all three claims to be unpatentable.

The comments also provide some well-reasoned suggestions to the PTO in response to their Request for Comments (including the suggestion that the Guidelines actually be binding on examiners), and further provide rebuttals to questions posed by the PTO that many practitioners would agree are based on faulty legal and scientific reasoning. One noteworthy question asked by the Office asks whether patentable subject matter must "necessarily" produce a useful concrete and tangible result, and not merely be "capable of" of producing such a result. The FSIIPA answers as follows:

The distinction between "capable of" producing a "useful, concrete and tangible result" and "necessarily" producing it is not cognizable under the law. A brief review will demonstrate that 95% or more of apparatus claims are drafted in "device for…" or "device capable of ..." or "device designed to..." form, and almost never in "device that is this very second accomplishing…" The Guidelines cite no current case law that supports a "necessarily" vs. "capable of" distinction, and the PTO lacks the authority to create new substantive law. Merck & Co. v. Kessler, 80 F.3d 1543, 1550, 38 USPQ2d 1347, 1351 (Fed. Cir. 1996) (the PTO does "NOT … have authority to issue substantive rules," emphasis the court’s).

"Capable of" or "device for" claims are absolutely crucial to effective patent protection, to catch infringements such as the following:

• situations involving imports and exports

• parts designed for a particular purpose, but not assembled

• divided infringement, where no single party practices an entire claim – for example, in telecommunications, or in business transactions that require a buyer, a seller, and a financing source.

• infringement without knowledge of the patent, and other "technical" limits on induced and contributory infringement – well-drafted patents sidestep these limits by claims drafted in "device for…" or "device capable of…" form as opposed to "device performing" or "device that necessarily performs" claims

• replaceable or repairable parts

• known products made by new processes

The proposed test is also simply impractical. Some algorithms reach a useful result on some inputs, but other inputs confound the algorithm - a useful result is not "necessarily" achieved, but the algorithm is nonetheless useful. Likewise, insurance is issued solely because it is "capable" of reaching a result – even though everyone involved hopes it never happens.

A claim directed to "capable of" a useful result is one instance where disclosure in the specification is sufficient to impart "useful, concrete and tangible" character
to a claim.

Read more from the FSIIPA here.

Read other comments posted on the USPTO site here

Monday, October 09, 2006

Lack of Pre-Filing Investigation Results in Harsh Lesson For Eon-Net

This summary is not available. Please click here to view the post.

USPTO Clarification: Office Will NOT Reexamine Patent Claims That Weren't Specifically Requested

Last week, the USPTO released a notice clarifying that claims not specifically identified and addressed for reexamination would generally not be reviewed by the USPTO.

The Office is clarifying its practice to make it clear that, where reexamination is requested for fewer than all of the patent claims, the Office's determination on the request (the order granting or denying reexamination) will generally be limited to a review on the merits of only the claim(s) for which reexamination was requested. In the examination stage of the proceeding, the Office will generally examine only those claims for which reexamination was requested, and for which a substantial new question of patentability (SNQ) was raised.
In special cases however, examiners are given discretion to review non-requested claims

This policy facilitates the Office's compliance with its statutory mandate for special dispatch in handling reexamination proceedings. In appropriate instances, however, the Office may (in its sole discretion) decide to examine some or all of the non-requested claims (provided that at least one SNQ has been established by the request or has been sua sponte determined to exist by the Office).
The Office reiterated its position on reexamination requests made during pending litigation and maintained that reexamination would be suspended or dropped once a final determination was made on the validity of the claims:

Additionally, where a final decision of a federal court, after all appeals, holds some of (one or more of) the patent claims invalid or unenforceable, the claims held invalid or unenforceable will not be reviewed on the merits in any reexamination proceeding. Further, review on the merits of claims is barred in an inter partes reexamination proceeding for any patent claim whose validity is upheld in a final decision of a federal court, after all appeals, if the person who filed the request was a party to that federal court litigation (or in privity with a party to that federal court litigation). 35 U.S.C. 317(b). If reexamination of all the patent claims becomes barred as a result of a federal court decision, a reexamination proceeding cannot be initiated based on the patent, and the Office will discontinue reexamination, if it has already been initiated.
The notice follows the Eastern District of Virginia's ruling in Sony Computer Entertainment America Inc., et al. v. Jon Dudas, Civil Action No. 1:05CV1447 (E.D.Va. May 22,2006), Slip Copy, 2006 WL 1472462, where the court upheld the Office's discretion to not reexamine the non-requested claims of two patents in an inter partes reexamination proceeding. Read the opinion here, courtesy of Patently-O.

Thursday, October 05, 2006

Google Announces Search Engine For Searching Software Code

Google has announced the introduction of Code Search, which will allow software developers to search for programming code to improve existing software or create new programs.

While not for the faint of heart (i.e., non-programmers), developers can use Code Search to seek out specific programming terms or computer languages (JAVA, C++) and access compressed code to locate specific features. An application programming interface (API) is also provided to create an XML feed based on a specific query to allow third-party developers to integrate a code search box into their development tools. More impressive is the fact that users can narrow searches to find software code based on specific licensing requirements, which could help new programs to avoid future patent infringement issues.

The service claims to have indexed several billions lines of code from archives hosted on the web, as well as software control repositories from services like SourceForge and Google Code which host open source projects. The searches are conducted using the standard Google interface, but results are for machine-readable phrases such as "go{2}gle" "hello,\ world" or "^int printk."

To see Google Code Search, click here.

Wednesday, October 04, 2006

Posted: MedImmune Inc. v. Genentech Inc. Supreme Court Oral Argument

Today, the Supreme court heard oral arguments on MedImmune Inc. v. Genentech Inc. At issue in the case is whether a company must stop paying royalties on a patent license in order to challenge the validity of the patent. MedImmune is paying licensing fees to Genentech on antibody technology used in MedImmune's childhood respiratory drug, Synagis. At the same time, Medimmune wants to challenge Genentech's patent in court.

The transcript for the oral arguments have been posted by the Supreme Court, and can be downloaded here.

The Federal Circuit Tries to Set the Record Straight on Obviousness

Dystar Textilfarben GMBH & Co Deutschland KG v. C.H. Patrick, Co., et al. (06-1088) - October 3, 2006

The process of dyeing textile materials with catalytically hydrogenated leuco indigo traditionally has involved six steps: (1) reducing indigo to its leuco form in solution; (2) stabilizing the leuco indigo solution, usually in paste or powder form; (3) creating a preparation tank in which the dried leuco indigo is re-converted to solution form; (4) adding the solution to the dyebath; (5) dipping; and (6) skying. Dystar's US Patent 5,586,992 ("the '992 patent") improved upon the prior art by eliminating steps two and three of the traditional process: stabilizing the leuco indigo solution into a paste or powder form, and then reconstituting the solution in a preparation tank. Instead, it allowed a dyer to pour prereduced indigo solution directly into a dyebath and commence dyeing immediately.

After a jury trial, the '992 patent was held valid and infringed by C.H. Patrick. Damages were assessed at $90,000. C.H. Patrick appealed, arguing that the jury and the lower court improperly analyzed the teaching-suggestion-motivation (TSM) contained in three prior art references that would have rendered the '992 patent obvious. Because the jury did not make explicit factual findings in the form of answers to written interrogatories or special verdicts, the court discerned the jury's implied factual findings by interpreting the evidence consistently with the verdict and drawing all reasonable inferences in DyStar's favor.

The parties disagreed over the relevance of the cited prior art, which the court found tantamount to a disagreement over the level of ordinary skill in the art. DyStar asserted that the prior art was not analogous, because a person of ordinary skill in the art would not be aware of these references. In other words, DyStar argued that no knowledge of chemistry is required in the relevant technical field. Evidence submitted to the jury showed that two potential levels of ordinary skill existed: (1) that of a dyer (described as someone with "a high school degree" who is "able to read and write") and (2) a dyeing process designer (i.e., a person creating the dye processes). While the court acknowledged the jury's finding that a lower level of skill was involved, the nature of the problems to be solved in the '992 patent compelled the court to conclude that a higher level of skill was needed to appreciate the teaching in the patent:

[s]ubstantial evidence does not support the jury's finding that a person of ordinary skill is a dyer with no knowledge of chemistry. Indeed, that factual finding is inconsistent with the '992 patent's very purpose. The technical problem that the process of the '992 patent and the prior art cited by Bann sought to solve is precisely the same: an improved process for dyeing textile materials with indigo. This process includes several discrete subcomponents—e.g., indigo reduction and dyebath preparation—and an ordinary artisan would be concerned with all of them. To beneficially practice the dyeing process claimed in the '992 patent, the ordinary artisan must have a higher-level perspective, as he must first decide whether it is more efficient to reduce indigo in-house or purchase prereduced indigo and, if prereduced, must then decide whether solid or solution form is preferable . . . the jury's implicit finding of a mere dyer cannot withstand scrutiny on JMOL.

The court also addressed the suggestion test, which prompted a few choice words from the bench on "commentators" that allege that the Federal Circuit "weakened" the obviousness standard:

In contrast to the characterization of some commentators, the suggestion test is not a rigid categorical rule. The motivation need not be found in the references sought to be combined, but may be found in any number of sources, including common knowledge, the prior art as a whole, or the nature of the problem itself.

DyStar's argument misreads this court's cases and misdescribes our suggestion test, echoing notions put forth recently by various commentators and accepted in major reports. A 2003 report by the Federal Trade Commission, for example, quoted testimony of certain witnesses that this court requires "specific and definitive [prior] art references with clear motivation of how to combine those references" and requires the PTO to find "the glue expressly leading you all the way [to obviousness]" and "connect the dots . . . very, very clearly." Fed. Trade Comm'n, To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy ch. 4, at 11 (2003). Similarly, a 2004 report by the National Academy of Sciences summarized views of a few commentators that "standards of patentability—especially the non-obviousness standard—have become too lax as a result of court decisions" by the Federal Circuit, leading to the deterioration of patent quality. Nat'l Research Council, A Patent System for the 21st Century 3 (Stephen A. Merrill et al. eds., 2004) . . .

Seeking to support their assertions about Federal Circuit caselaw, these few commentators have quoted isolated statements from three of our precedents [In re Dembiczak, In re Lee, and Ruiz v. A.B. Chance Co.] . . . Despite containing arguably imprecise language in these statements, quoted out of context, each of the above-cited cases correctly applies the suggestion test and by no means requires an explicit teaching to combine to be found in a particular prior art reference.

It is difficult to see how our suggestion test could be seen as rigid and categorical given the myriad cases over several decades in which panels of this court have applied the suggestion test flexibly. Obviousness is a complicated subject requiring sophisticated analysis, and no single case lays out all facets of the legal test.

After rebutting the critics, the Federal Circuit went through a slew of cases and pointed out how the Federal Circuit has remained consistent with the Graham requirements (and, in a footnote, acknowledged the upcoming KSR v. Teleflex Supreme Court case), and concluded that the suggestion test has always been (and always will be?) a "flexible test":

Our suggestion test is in actuality quite flexible and not only permits, but requires, consideration of common knowledge and common sense. See, e.g., In re Kotzab, 217 F.3d 1365, 1369 (Fed. Cir. 2000) ("A critical step in analyzing the patentability of claims pursuant to section 103(a) is casting the mind back to the time of invention, to consider the thinking of one of ordinary skill in the art, guided only by the prior art references and the then-accepted wisdom in the field."); Motorola, 121 F.3d at 1472 ("[T]he suggestion to combine may come from the prior art, as filtered through the knowledge of one skilled in the art."); Bozek, 416 F.2d at 1390 ("Having established that this knowledge was in the art, the examiner could then properly rely, as put forth by the solicitor, on a conclusion of obviousness 'from common knowledge and common sense of the person of ordinary skill in the art without any specific hint or suggestion in a particular reference.'").

Indeed, we have repeatedly held that an implicit motivation to combine exists not only when a suggestion may be gleaned from the prior art as a whole, but when the "improvement" is technology-independent and the combination of references results in a product or process that is more desirable, for example because it is stronger, cheaper, cleaner, faster, lighter, smaller, more durable, or more efficient. Because the desire to enhance commercial opportunities by improving a product or process is universal—and even common-sensical—we have held that there exists in these situations a motivation to combine prior art references even absent any hint of suggestion in the references themselves. In such situations, the proper question is whether the ordinary artisan possesses knowledge and skills rendering him capable of combining the prior art references.

Although this court customarily discusses a motivation to combine as part of the first Graham factor, the scope and content of the prior art, see SIBIA Neurosciences, 225 F.3d at 1356, motivation to combine is also inextricably linked to the level of ordinary skill. If, as is usually the case, no prior art reference contains an express suggestion to combine references, then the level of ordinary skill will often predetermine whether an implicit suggestion exists. Persons of varying degrees of skill not only possess varying bases of knowledge, they also possess varying levels of imagination and ingenuity in the relevant field, particularly with respect to problem-solving abilities. If the level of skill is low, for example that of a mere dyer, as DyStar has suggested, then it may be rational to assume that such an artisan would not think to combine references absent explicit direction in a prior art reference. If, however, as we have held as a matter of law, the level of skill is that of a dyeing process designer, then one can assume comfortably that such an artisan will draw ideas from chemistry and systems engineering—without being told to do so.

All claims were invalidated for obviousness.


- A huge case worthy of a close read.

Tuesday, October 03, 2006

Reexamination Granted on WARF Patents

The Santa Monica-based Foundation for Taxpayer and Consumer Rights ("FTCR") along with the Public Patent Foundation ("PUBPAT") are reporting that the United States Patent and Trademark Office granted its request that the agency re-examine three key human embryonic stem cell patents held by the Wisconsin Alumni Research Foundation (WARF).

The patents under reexamination are US Patents 5,843,780, 6,200,806, and 7,029,913, which have been described as "overreaching patents" that cover human embryonic stem cells. According to PUBPAT:

“WARF has been allowed to profit at the expense of public health while many American scientists have been barred from conducting life-saving medical research. These over-reaching patents threaten our health, waste taxpayer money, and send valuable research overseas,” said Dan Ravicher, Executive Director of PUBPAT. FTCR and PUBPAT argued that the work done by University of Wisconsin researcher James Thomson to isolate stem cell lines was obvious in the light of previous scientific research, making the work unpatentable.

Dr. Jeanne Loring, a stem cell scientist at the Burnham Institute for Medical Research, had filed a statement supporting the groups' challenges. "The real discovery of embryonic stem cells was by Martin Evans, Matt Kaufman, and Gail Martin in 1981, and none of these scientists considered patenting them," said Loring. "It is outrageous that WARF claimed credit for this landmark discovery nearly 15 years after it was made. "The groups said the patents' dubious validity is underscored by the fact that no other country in the world honors them.

The patents are being cited as a primary reason why U.S. researchers have sent research monies abroad where they can avoid paying royalties to WARF.

See PUBPAT Reexamination documents and news updates here.


You can also follow the Reexamination proceedings on the USPTO's PAIR system:

US Patent 5,843,780 ex-parte reexamination proceeding (90/008,102)

US Patent 6,200,806 ex-parte reexamination proceeding (90/008,139)

US Patent 7,029,913 inter-partes reexamination proceeding (95/000,154 )

Actual Damages On Trademark and Patent Infringement Impermissible Double-Recovery

Aero Products Int'l v. Intex Recreation Corp. (05-1283) - October 2, 2006

Aero sued Intex Recreation Corp. for infringement of U.S. Patent No. 5,367,726 ("the ’726 patent") and for infringement of Aero’s registered trademark "ONE TOUCH." Following a jury trial, the district court entered judgment of infringement in favor of Aero with respect to the asserted claims of the ’726 patent and with respect to Aero’s trademark claim. Based upon that judgment, the court awarded Aero damages in the total amount of $6.9 million.

Intex appealed, arguing that an improper claim construction was given by the lower court, and further argued that Aero's recovery of actual damages from both patent and trademark infringement resulted in an impermissible double-recovery of damages.

With regard to issue of damages, the Federal Circuit stated that "[a]lthough the question relates in part to trademark damages, it also involves a matter unique to patent law, damages for patent infringement ." Accordingly, the court concluded that "[w]e believe that this question is properly determined under Federal Circuit law ."

Looking at numerous Federal Circuit decisions, the court stated that when a question arises whether one or more wrongs have been committed by a defendant, the court will focus on the conduct that damaged the plaintiff, and whether the damages arose "from the same set of operative facts":

• Bowers v. Baystate Techs., Inc. - the trial court did not abuse its discretion by allowing the jury to award damages for copyright and contract claims for the same cause of action and then omitting the duplicative copyright damages, since the breach of contract damages arose from the same copying and included the same lost sales that formed the basis for the copyright damages.

• Catalina Lighting, Inc. v. Lamps Plus, Inc. - faced with the question of whether a patentee may recover both infringer profits and a reasonable royalty when both a design patent and utility patent have been infringed by the sale of a single product, the court found that the plaintiff was entitled to damages for each infringement, but once it receives profits under § 289 for each sale, it is not entitled to a further recovery from the same sale because the award of infringer profits under § 289 also constitutes "damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer."

• Junker v. Eddings - "[t]he dollar amount that Junker now seeks as damages for breach of contract is identical to the dollar amount the jury awarded him for infringement. Both claims arose out of the same set of operative facts regarding Galt’s unauthorized use of the design Junker had developed. The circumstances at least suggest that awarding Junker the damages he seeks on his breach-of-contract claim would constitute a double recovery."

• CPG Prods., Corp. v. Pegasus Luggage, Inc. - "[t]hough the district court ordered accountings for damages resulting from patent infringement and from unfair competition, Lark is not entitled to dual damages resulting from the same act."

Applying the law to the Aero case, the court concluded that an impermissible double-recovery had been obtained by Aero:

[t]he record demonstrates that Aero based both its patent and trademark damages solely on sales of the accused Intex mattresses. Aero did not rely on any other evidence in support of its trademark damages. In other words, there was no evidence introduced at trial of Intex’s use of the mark "ONE TOUCH" other than in connection with the sales of mattresses that formed the basis for Aero’s patent infringement claim. In short, all of the damages awarded to Aero flowed from the same operative facts: sales of the infringing Intex mattresses. Aero was fully compensated for defendants’ patent infringement when it was awarded a reasonable royalty for patent infringement based on sales of the infringing Intex mattresses. It could not also be awarded defendants’ profits for trademark infringement based on the same sales of the same accused devices.


Inconsistent Claim Construction on Infringement and Invalidity = Remand

SRAM Corp. v. AD-II Engineering, Inc. (05-1365) - October 2, 2006

SRAM sued AD-II over US Patent 4,900,291, which discloses shift actuators having built-in overshift capability and a mechanism that assures "precise" downshifting in bicycles. During litigation, the court first heard arguments regarding infringement, and found that AD-II infringed the '291 patent as a matter of law. In finding infringement, the court relied on a claim construction from a companion case involving the same patent, which was further construed by the Federal Circuit on appeal, ruling that the ordinary meaning applied to the claim terms.

Next, the district court heard arguments regarding invalidity. AD-II asserted that the patent was invalid in light of anticipatory prior art and the earlier claim construction. This time, the district court issued an order construing the claim as describing a method of "precision indexed downshifting," which maintained the claims as valid over the prior art.

In its appeal, AD-II argued that the district court was improperly having it both ways, by interpreting claims one way for infringment, and another way to preserve validity. The Federal Circuit agreed, finding that the term "indexing" could not even be found in the disputed claim. Interestingly, the court traced the claim-construction problems back to the USPTO, where the patent-in-suit experienced the standard examination process and three reexamination proceedings:

SRAM also urges that we adopt the district court’s construction of claim 16 as providing for "precision indexed downshifting" on the ground that, after three reexamination proceedings, the Patent Examiner—like the district court—construed claim 16 as providing "precision indexed downshifting" as a means to take up lost motion, and confirmed its patentability over prior art gear-shifting devices that require a user to manually overshift. This argument is not persuasive. While the Patent and Trademark Office (the "PTO") generally gives claims their broadest reasonable interpretation consistent with the specification, . . . paradoxically in this case, the PTO construed the claim narrowly, rather than broadly, by reading in the same limitation as did the district court. In doing so, the PTO erred for the same reasons as did the district court. The Patent Examiner’s actions thus provide no support for SRAM’s argument. Furthermore, this court is not bound by the PTO’s claim interpretation because we review claim construction de novo . . .
Apparently, SRAM did not relish the prospects of defending against invalidity on this construction, and urged the Federal Circuit to uphold the lower court's decision. The court respectfully declined, noting that, in claim construction, broader is not always better:
By failing to recite any indexing, claim 16 fails to claim the positive indexing feature and recites nothing more than a broad method that applies both to indexed shifters and to non-index shifters alike. While SRAM strongly urges the court to interpret the claim to encompass the innovative precision indexing shifting feature it contends it has invented, we are powerless to rewrite the claims and must construe the language of the claim at issue based on the words used.

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